Latest Buzz...


Friday, July 25, 2014

Government fumbles energy policy

In December 2013 the Abbott Government released an Energy Policy issues paper.

"The Energy White Paper will set out a coherent and integrated approach to energy policy to reduce cost pressures on households and businesses, improve Australia's international competitiveness and grow our export base and economic prosperity."

The Terms of Reference began -
The Australian Government has committed to a set of signature economy-wide reforms to grow the economy while addressing rising business and household costs.
The Australian Government is committed to working closely with industry and state and territory governments in the development of an integrated, coherent national energy policy.
The issues to be considered in the Energy White Paper were -

  • policy and regulatory reform to secure reliable, competitively and transparently priced energy for a growing population and productive economy, including the efficiency and effectiveness of regulatory bodies;
  • the appropriate role for government in the energy sector;
  • opportunities to drive the more productive and efficient use of energy;
  • energy related distribution infrastructure to deliver efficient national markets;
  • alternative transport fuel sources;
  • workforce issues, including national skills development needs;
  • emerging energy technologies and new energy sources; and
  • future growth in exports of energy products, including our world leading services industries.

A Green Paper will be released for consultation in May 2014.
The Energy White Paper will be completed in September 2014.
The timetable set out was -
The Energy White Paper will be led by the Department of Industry. 
An Issues Paper will be released by mid December 2013 to initiate consultation. 
A Green Paper will be released for consultation in May 2014. 
The Energy White Paper will be completed in September 2014. 

High gas prices threaten thousands of jobs, billions of dollars: industry

ABC News | 21 July 2014

With energy prices soaring and threatening jobs, manufacturing, mining and agriculture, the Government has delayed the release of the energy policy Green Paper. It was not completed in May. The White Paper - due to be completed in September 2014 - has also been delayed.

According to the Industry Department web site in July 2014 -

The Energy Policy Green paper is now expected to be released in August.
Further submissions will be sought on the release of this paper.
It will be December before the Energy White Paper is released.

Submissions by special interest groups include -

The Minerals Council of Australia - February 2014

Low cost, reliable energy has been a critical element of the international competitiveness of Australian industry and the living standards of households for several decades. The central role of low cost reliable coal in electricity generation has been the primary contributor to this competitive edge.

But this advantage has been lost, with electricity prices now amongst the highest in the developed world, substantially due to ill-judged policy interventions. High energy costs represent a substantial burden on Australian households and industry, including the mining sector which accounted for 13.5 per cent of final energy consumption in 2011-12.

These policy mistakes should be reversed including by:
  • Urgent repeal of the carbon tax, which should lead to an immediate 9 per cent decrease in energy costs.
  • The phasing out of the Renewable Energy Target, which represents a $20 to $30 billion subsidy to the renewable sector by 2030, with the cost borne by industrial users and households.
The Government should also recognise that costly efforts to change the energy mix ignore the substantial gains in low emissions technologies from traditional energy sources. Australia does not have to choose between coal and a low emissions future.

The roadmap to a low emissions coal future is increasingly clear. ...
The chart below is from the Minerals Council of Australia submission on the government's energy policy issues paper. It conceals two significant facts: 1. Existing natural gas power stations achieve 60 per cent thermal efficiency and produce just 330 g of CO2 per kWh. 2. The coal industry has built and tested two coal-to-gas power stations in the US that are able now to capture CO2. These power stations can use natural gas or coal as fuel. They reduce the amount of coal needed to produce electricity. It seems the coal industry wishes to ensure that technology to reduce demand for coal is not used.
Comment: The "roadmap" to a low emissions coal future is increasingly clear.
It is costly and relies on technology that is obsolete.
See: "The Coal Lobby Scores an Own Goal"

The Institute of Public Affairs - March 2014

A prominent role in the paper’s terms of reference is given to the supposed need to maintain analytical capability within the government. This Departmental protection goal is an unwarranted priority in the context of the market driven industry the White Paper claims to be championing. ...


"The market can solve problems I don't understand" - the last refuge of ignorance.

Australians would still be using leaded petrol if their governments had the IPA's faith that "the market" can solve any problem and governments don't need and shouldn't maintain informed policy advice.
It would be unfortunate if the White Paper were to be progressed as though, in the absence of government oversight, energy markets would not develop efficiently. Markets develop from the interactions of consumers with businesses, which seek to sell their goods, access inputs and reduce risks. Governments’ role is to allow these processes to be pursued and to uphold the law.

Rather than a plethora of goals, the White Paper should have a single focus: to allow the market to bring about efficient production of energy with interventions limited to addressing natural monopoly situations. Anything beyond that will ensure the weaknesses presently evident will remain.


Australia is likely to have the lowest cost sources of fossil fuel powered electricity generation in the world. These are, most significantly based on almost endless supplies of coal, much of which is conveniently located close to the main load centres. The coal used for local electricity generation has no real alternative uses as it is of too low a quality for profitable export (and in the case of brown coal is not even easily transportable). Australia’s low costs, on current technology, can generate unlimited amounts of base load power at around $35 per MWh.

This is almost certainly the lowest cost power available in large quantity in the world. Other countries have abundant coal reserves but few have them as readily accessible. Alternative energy sources are more expensive. Solar is impossibly so, ...